US university professors including Hall and Woodford were selected for the Nobel Prize in Economic Sciences, in recognition of the impact of New Keynesian theory on the practical application of macroeconomic stabilisation.
Robert Hall of the US and Michael Woodford of Columbia University were selected for the Nobel Prize in Economic Sciences, with their contribution to the use of New Keynesian economics in fiscal and monetary policy in major developed economies cited as a reason for the award. The award is said to recognise the link between practical policy and theory aimed at stabilising the macroeconomy.
The article highlights that New Keynesian theory uses dynamic stochastic general equilibrium models and incorporates microfoundations such as household utility maximisation and corporate profit maximisation. It explains that the theory made existing macroeconomic models easier to analyse and specified the assumptions used in forecasting and policy analysis.
From the perspective of Japan's economics community, the article introduces the critical views of Yoshikawa Hiroshi (吉川 洋), professor emeritus at the University of Tokyo, as well as assessments by Bank of Japan officials. It also discusses the application of entropy methods as an alternative to New Keynesian theory and notes that Japanese researchers have shown an interest in bridging practical policy and theory.
The article focuses on the view that Hall and Woodford's award led to the introduction of microfoundations into macroeconomic policy and the spread of dynamic analytical methods, and also refers to policy responses during the COVID-19 pandemic and the energy crisis.